Business Economics Assignment: Market Analysis of the Nordic Bridge

This assignment analyzes the market for the Nordic bridge, focusing on key economic concepts. It begins by defining the market structure as perfectly competitive, examining the demand curves faced by individual countries (Denmark and Sweden) and the overall market. The analysis considers the availability of substitute transport options (rail and ferry) and the impact of price changes on demand. The assignment then explores non-price determinants influencing demand, such as increased cross-cultural communication and improved transport facilities, and how these factors shift the market demand curve. Finally, the assignment delves into the concept of price elasticity of demand, arguing that the bridge's demand curve is elastic due to the presence of substitutes. The author suggests that reducing the price of a one-way crossing could increase revenue by attracting more travelers. Diagrams are used to illustrate the market demand and supply curves, as well as the shifts caused by changes in demand and the implications of elastic demand.